Future of Labor Unions in Changing U.S. Economy

For more on the future of labor unions in a changing U.S. economy, I'm joined by Philip Dine. He's the author of State of the Unions: How Labor Can Strengthen the Middle Class, Improve Our Economy, and Regain Political Influence.

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Video @: https://www.youtube.com/watch?v=Gy81Fj5lrM0

I agree 100%. I do believe that we have moved backwards since the 50's. After the 50's and early 60's our middle class started not to move forward, and expand. Instead the middle class began to shrink and so did union membership. Now the ratio of pay CEO to an average worker in America is 475:1. Something is seriously wrong in this country, and I believe unions can help solve a lot of the problems in this country, especially when it deals with inequality.

Contracts system is what more countries should adopt.

The middle class shrinks because government grows...



But maybe correlation doesn't imply causation.

The fact of the matter is that companies will take steps to raise their prices/profit by limiting competition. Unions will also take steps to raise their wages/profit by limiting competition. Everybody wants a monopoly. But if everybody has a monopoly...then our costs (the prices we pay for things we want) will exceed our profit. The money you earn for your employment will certainly increase...but everything you want to buy will also be far more expensive.

Yes, you have a monopoly on lemonade...but somebody else has a monopoly on lemons and somebody else has a monopoly on sugar and somebody else has a monopoly on cups and somebody else has a monopoly on labor. You can charge high prices but you also have to pay high prices.

A system where everybody cheats is a system where everybody loses.

So, as a society, we should ensure that companies and workers cannot take steps to limit competition. If anybody wants to increase their profits...then the only steps they should be free to take will be towards the addition of more value to their product.

If you want to increase the value of your labor...then you should squeeze more lemons than the other workers. If you want to increase the value of your lemonade...then you should use date sugar instead of cane sugar.

Unfortunately our current system is unable to prevent people from cheating. Therefore, we need a new sytem...pragmatarianism.

Xerographica said:

The middle class shrinks because government grows...



But maybe correlation doesn't imply causation.

The fact of the matter is that companies will take steps to raise their prices/profit by limiting competition. Unions will also take steps to raise their wages/profit by limiting competition. Everybody wants a monopoly. But if everybody has a monopoly...then our costs (the prices we pay for things we want) will exceed our profit. The money you earn for your employment will certainly increase...but everything you want to buy will also be far more expensive.

Yes, you have a monopoly on lemonade...but somebody else has a monopoly on lemons and somebody else has a monopoly on sugar and somebody else has a monopoly on cups and somebody else has a monopoly on labor. You can charge high prices but you also have to pay high prices.

A system where everybody cheats is a system where everybody loses.

So, as a society, we should ensure that companies and workers cannot take steps to limit competition. If anybody wants to increase their profits...then the only steps they should be free to take will be towards the addition of more value to their product.

If you want to increase the value of your labor...then you should squeeze more lemons than the other workers. If you want to increase the value of your lemonade...then you should use date sugar instead of cane sugar.

Unfortunately our current system is unable to prevent people from cheating. Therefore, we need a new sytem...pragmatarianism.

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Another correlation: Middle class income dropped almost exactly when we went off the gold standard completely.

Bigfoot 88 said:

Another correlation: Middle class income dropped almost exactly when we went off the gold standard completely.

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Shhhhhhhhhhhhhh! That's a gold bugs secret.

Xerographica said:

The middle class shrinks because government grows...

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Yeah, that's the only logical explanation. It would be totally moronic to think that government grows BECAUSE the middle class shrinks. Not like government services increase when more and more people slip into poverty.*

*this message is definitely not paid for by billionaires seeking to canabalize the poor for marginal increases in profits

ChunkySalsa said:

Yeah, that's the only logical explanation. It would be totally moronic to think that government grows BECAUSE the middle class shrinks. Not like government services increase when more and more people slip into poverty.*

*this message is definitely not paid for by billionaires seeking to canabalize the poor for marginal increases in profits

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look closely at the graph, from about 1980 to 2000 government spending stayed more or less the same, and that was the time where the middle glass fell off fast.

The middle class is shrinking because it has moved up not down.

Yes, the middle class has been disappearing, but they haven’t fallen into the lower class, they’ve risen into the upper class | AEIdeas

as for labor unions? until they become a balanced that they are not bankrupting companies then the majority of the public will see them as a negative influence on their jobs.
unions require companies to exist. the opposite is not true.

Unions have put themselves into the situation that they are. the only ones that can get them out of it themselves it they are going to have to change their mindset and i doubt they will do it.

ChunkySalsa said:

Yeah, that's the only logical explanation. It would be totally moronic to think that government grows BECAUSE the middle class shrinks. Not like government services increase when more and more people slip into poverty.*

*this message is definitely not paid for by billionaires seeking to canabalize the poor for marginal increases in profits

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The fact of the matter is that everybody wants a free lunch. So the government gives free lunches to workers, voters and corporations. It's only logical that the government should grow.

What's the problem with free lunches though? Do you think free lunches increases in value over time? Do you think there's some mechanism that drives their improvement?

In the private sector...there aren't any free lunches. If you want a lunch...you have to pay for it. Consider these factors...

1. You're spending your own money on lunch
2. You can compare the costs of the different lunch options
3. You can compare the value provided by the different lunch options
4. You can choose whichever lunch option provides you with the most bang for your buck

Consumer choice is the mechanism which drives the improvement of the value to cost ratio. Producers are incentivized to provide better option because you strive to spend your own money on the best options. If you can't strive to spend your own money on the best options then why do you think producers will make the effort to provide better options? Why should they make more effort to reduce costs if the reward is the same no matter what?

The size of the government isn't the problem...the fact that people want free lunches isn't the problem...it's the structure of government that's the problem. By preventing consumers from engaging in the fundamentally essential value seeking/comparison/choosing process...we ensure that the government will not use society's limited resources to provide society with the maximum possible value.

In essence, you think you're getting a free lunch...but you're actually getting ripped off. You just don't realize it because the (opportunity) costs are hidden.

Xerographica said:

The fact of the matter is that everybody wants a free lunch. So the government gives free lunches to workers, voters and corporations. It's only logical that the government should grow.

What's the problem with free lunches though? Do you think free lunches increases in value over time? Do you think there's some mechanism that drives their improvement?

In the private sector...there aren't any free lunches. If you want a lunch...you have to pay for it. Consider these factors...

1. You're spending your own money on lunch
2. You can compare the costs of the different lunch options
3. You can compare the value provided by the different lunch options
4. You can choose whichever lunch option provides you with the most bang for your buck

Consumer choice is the mechanism which drives the improvement of the value to cost ratio. Producers are incentivized to provide better option because you strive to spend your own money on the best options. If you can't strive to spend your own money on the best options then why do you think producers will make the effort to provide better options? Why should they make more effort to reduce costs if the reward is the same no matter what?

The size of the government isn't the problem...the fact that people want free lunches isn't the problem...it's the structure of government that's the problem. By preventing consumers from engaging in the fundamentally essential value seeking/comparison/choosing process...we ensure that the government will not use society's limited resources to provide society with the maximum possible value.

In essence, you think you're getting a free lunch...but you're actually getting ripped off. You just don't realize it because the (opportunity) costs are hidden.

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The easy way to debunk all of this is just to look at the data, in 2000 when government spending grew was it because social programs were expanding? No, it wasn't, they wern't, InFact they had been significantly cut in the 80s and 90s. It was because more People needed them, and because military spending went up.

Empirical evidence beats loony theory everytime.

RGacky3 said:

The easy way to debunk all of this is just to look at the data, in 2000 when government spending grew was it because social programs were expanding? No, it wasn't, they wern't, InFact they had been significantly cut in the 80s and 90s. It was because more People needed them, and because military spending went up.

Empirical evidence beats loony theory everytime.

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What do you think about the following argument?

One could imagine every person in the community being indoctrinated to behave like a "parametric decentralized bureaucrat" who reveals his preferences by signalling in response to price parameters or Lagrangean multipliers, to questionnaires, or to other devices. But there is still this fundamental technical difference going to the heart of the whole problem of social economy: by departing from his indoctrinated rules, any one person can hope to snatch some selfish benefit in a way not possible under the self-policing competitive pricing of private goods; and the "external economies" or "jointness of demand" intrinsic to the very concept of collective goods and governmental activities makes it impossible for the grand ensemble of optimizing equations to have that special pattern of zeros which makes laissez-faire competition even theoretically possible as an analogue computer. - Paul A. Samuelson, The Pure Theory of Public Expenditure

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A. It's not a loony theory. Therefore you agree that everybody wants a free lunch (snatch some selfish benefit). This means that you believe that compulsory taxation is necessary.

B. It's a loony theory. Therefore you disagree that everybody wants a free lunch. This means that you believe that compulsory taxation is not necessary.

So which is it...A...or B?

In case you missed it...Paul Samuelson was a liberal Nobel Prize winning economist. His paper "The Pure Theory of Public Expenditure" is the most widely cited paper on the topic. And in case you missed it...the topic is whether compulsory taxation is necessary.

You're welcome to argue that people don't really want a free lunch...but please be aware that in doing so you're arguing that taxes should be voluntary.

Xerographica said:

What do you think about the following argument?



A. It's not a loony theory. Therefore you agree that everybody wants a free lunch (snatch some selfish benefit). This means that you believe that compulsory taxation is necessary.

B. It's a loony theory. Therefore you disagree that everybody wants a free lunch. This means that you believe that compulsory taxation is not necessary.

So which is it...A...or B?

In case you missed it...Paul Samuelson was a liberal Nobel Prize winning economist. His paper "The Pure Theory of Public Expenditure" is the most widely cited paper on the topic. And in case you missed it...the topic is whether compulsory taxation is necessary.

You're welcome to argue that people don't really want a free lunch...but please be aware that in doing so you're arguing that taxes should be voluntary.

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It's a false Choice, taxation isn't done because People want a free lunch, it's done because there are certain Things that only the Public sector can take care of, i.e. the commons, certain Things that everyone in society benefits from if they are done outside the private for profit capitalist system, and in order to fund it, often taxation is the chosen way.

Bigfoot 88 said:

Another correlation: Middle class income dropped almost exactly when we went off the gold standard completely.

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We were on the Gold Standard in the 1920s yet income inequality was very high then. I think its a mistake to primarily focus on monetary or fiscal policy when trying to explain middle class stagnation / decline. What actually correlates perfectly is that container ships started to go into wide use back in the early 70s, this made it possible for goods to be produced anywhere in the world and shipped cheaply. Prior to the early 70s you could produce a product in a third world country, but the problem was shipping it here. With container ships you could ship everything from toys to cars quite cheaply, and thus it made economic sense to start offshoring jobs and production. When American workers started to really having to compete with workers in China (Deng Xiaoping exploited this perfectly) and the the rest of the Third World, wages stagnated and unions weakened.

RGacky3 said:

It's a false Choice, taxation isn't done because People want a free lunch, it's done because there are certain Things that only the Public sector can take care of, i.e. the commons, certain Things that everyone in society benefits from if they are done outside the private for profit capitalist system, and in order to fund it, often taxation is the chosen way.

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Either people do want a free lunch and Samuelson was right...or people do not want a free lunch and Samuelson was wrong.

Xerographica said:

Either people do want a free lunch and Samuelson was right...or people do not want a free lunch and Samuelson was wrong.

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It's such a stupid question, it's akin to asking "do women want sex?" and then if someone says yes then you say "well then rape is ok."

The Connection between taxation and desiring "free lunches" simply isn't there, also People wanting "free lunches" Depends on the alternatives, the type of lunch and so on. So for example I may pay taxes to pay for roads, maybe I don't drive, but a work in a furnature shop, and customers come to the furnature shop by driving, so I benefit from there being roads .... am I getting a "free lunch" because my job Depends on something which I don't actually use but I pay for through taxes?

This is why I reject silly simplistic arguments that you always throw up.

Instead why not look at the data, there is no corrolation between government spending and the amount of People in the middle class, there is however a corrolation With unions.

SouthernDemocrat said:

We were on the Gold Standard in the 1920s yet income inequality was very high then. I think its a mistake to primarily focus on monetary or fiscal policy when trying to explain middle class stagnation / decline. What actually correlates perfectly is that container ships started to go into wide use back in the early 70s, this made it possible for goods to be produced anywhere in the world and shipped cheaply. Prior to the early 70s you could produce a product in a third world country, but the problem was shipping it here. With container ships you could ship everything from toys to cars quite cheaply, and thus it made economic sense to start offshoring jobs and production. When American workers started to really having to compete with workers in China (Deng Xiaoping exploited this perfectly) and the the rest of the Third World, wages stagnated and unions weakened.

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Container ships weren't the cause. Here's the correct sequence of events...

1. Unions strengthened (wages increased)
2. American jobs were pushed overseas
3. The demand for container ships increased
4. Unions weakened
5. American wages stagnated
6. World wages increased

Unions were very unintentionally altruistic. By pushing wages higher and higher...they ended up sending third world countries the only thing that would truly help them develop...jobs.

Liberals are still unintentionally altruistic. They still fight for stronger unions and higher minimum wages. They try and fight inequality here in the US...but they actually end up decreasing global inequality. It's a kind of hard to complain though because we're going to greatly benefit from a decrease in global inequality. As more and more people around the world are lifted out of poverty...they are going to allocate their creativity and ingenuity to developing innovations that help us thrive. Basically, Americans have far more to gain from other countries' innovations than other countries have to gain from American innovations.

RGacky3 said:

The Connection between taxation and desiring "free lunches" simply isn't there

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So Samuelson was wrong?

RGacky3 said:

This is why I reject silly simplistic arguments that you always throw up.

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LOL...I really wish that I could take credit for a paper that has been cited 6000 times.

Xerographica said:

Container ships weren't the cause. Here's the correct sequence of events...

1. Unions strengthened (wages increased)
2. American jobs were pushed overseas
3. The demand for container ships increased
4. Unions weakened
5. American wages stagnated
6. World wages increased

Unions were very unintentionally altruistic. By pushing wages higher and higher...they ended up sending third world countries the only thing that would truly help them develop...jobs.

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When you consider prevailing wages at the time in China (or even today), and much of the third world, your sequence is frankly absurd. We could have outlawed unions, and still we would not have been able to compete with third world labor costs. The catalyst was being able to ship goods cheaply due to the advent of container ships. Sure globalism decreases income inequality around the world, but you can't have globalism without being able to ship goods cheap and fast around the world. This is mainstream macro-economics 101 here.

How can you "push a job overseas" without already having in place the ability to ship that job's product around the world cheaply?

SouthernDemocrat said:

When you consider prevailing wages at the time in China (or even today), and much of the third world, your sequence is frankly absurd.

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Yes, if you're only comparing labor costs then the sequence would appear as absurd as believing that the cost of labor was the only factor. Errr...yeah. There are other factors.

SouthernDemocrat said:

We could have outlawed unions, and still we would not have been able to compete with third world labor costs.

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Uhhh...compete? How could Americans lose jobs to countries that already had the same jobs? The jobs in developing countries were pretty much subsistence agriculture. Read up on the Great Leap Forward to see if you can't get a better picture of the "competition".

If unions had been outlawed and minimum wages abolished...then the benefit to risk ratio would have been completely different. Maybe you don't understand that there's a huge amount of risk involved with moving your factory to a developing country? Is it possible that you could fail to grasp something so elementary?

Also, regarding those countries that were offering some genuine competition...like Japan...if American unions and minimum wages had been abolished...then wages would have decreased accordingly in response to the competition. Because that's how markets work. But because rent seeking behavior prevented markets from working as they should...it became worth it for factories to move to developing countries. Clearly Americans haven't learned the lesson that low wage are better than no wages.

SouthernDemocrat said:

The catalyst was being able to ship goods cheaply due to the advent of container ships. Sure globalism decreases income inequality around the world, but you can't have globalism without being able to ship goods cheap and fast around the world. This is mainstream macro-economics 101 here.

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Really? So there wasn't globalization when Adam Smith was around? Seriously? Let me guess...you haven't read Adam Smith? Do you even know who he is?

Globalization has "always" been around...but workers being able to coerce higher wages is a very recent development. So globalization greatly increased when unions forced wages high enough where it was worth the risk for factories to be moved to developing countries. When enough of these factories started making a profit...then other factories followed suit. This increased the demand for shipping.

Whether we're back in Adam Smith's days...or our days...few savvy investors are going to make massive investments in building bigger and better ships if the demand isn't there. Generally speaking, you don't make a lot of money by leaping without looking.

Xerographica said:

So Samuelson was wrong?

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No, the question is a false Choice.

Xerographica said:

Container ships weren't the cause. Here's the correct sequence of events...

1. Unions strengthened (wages increased)
2. American jobs were pushed overseas
3. The demand for container ships increased
4. Unions weakened
5. American wages stagnated
6. World wages increased

Unions were very unintentionally altruistic. By pushing wages higher and higher...they ended up sending third world countries the only thing that would truly help them develop...jobs.

Liberals are still unintentionally altruistic. They still fight for stronger unions and higher minimum wages. They try and fight inequality here in the US...but they actually end up decreasing global inequality. It's a kind of hard to complain though because we're going to greatly benefit from a decrease in global inequality. As more and more people around the world are lifted out of poverty...they are going to allocate their creativity and ingenuity to developing innovations that help us thrive. Basically, Americans have far more to gain from other countries' innovations than other countries have to gain from American innovations.

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That is EMPIRICALLY UNTRUE ....

American jobs were pushed over seas AFTER Unions were weakened and wages stagnated!!!!

RGacky3 said:

It's a false Choice, taxation isn't done because People want a free lunch, it's done because there are certain Things that only the Public sector can take care of, i.e. the commons, certain Things that everyone in society benefits from if they are done outside the private for profit capitalist system, and in order to fund it, often taxation is the chosen way.

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You left out a key word: "Cumpulsory". Read it again and try to answer the question that was asked.

FederalRepublic said:

You left out a key word: "Cumpulsory". Read it again and try to answer the question that was asked.

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Yes ... it's compulsory if you want to participate in society, if you want to go live in the Woods without state protection or property protection then you dont' have to participate.

RGacky3 said:

Yes ... it's compulsory if you want to participate in society, if you want to go live in the Woods without state protection or property protection then you dont' have to participate.

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Yes, but you didn't answer the question.

FederalRepublic said:

Yes, but you didn't answer the question.

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It's compulsery to avoid the tradgedy of the commons, but that doesn't come from "everyone wants a free lunch."

But Maybe Xeroographica can actually address the FACT that the economic data doesn't fit his theory.